O-I Glass, Inc. · NYSE:OI
O-I Glass — J.P. Morgan Chase conference 2005
35 slides from O-I Glass's conference presentation, Mar 29, 2005
Slide 1: Slide 1
Slide 2: J. P. Morgan Chase, March 29, 2005
J. P. Morgan Chase March 29, 2005
Slide 3: Tom Young, Executive VP and CFO
Tom Young Executive VP and CFO PRESENTATION TITLE AND DATE PAGE # 3
Slide 4: Forward Looking Statements
Forward Looking Statements This presentation contains “Forward-Looking Statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results and developments may differ materially from expectations and are subject to certain risks and uncertainties such as those described in
Slide 5: O-I Investment Highlights
O-I Investment Highlights • Worldwide leader in glass containers – attractive plastics presence • Technological leadership and global licensee network – glass and plastics • Long-standing relationship with “blue chip” customers • Low-cost producer of glass containers • Strategic portfolio realignmen
Slide 6: Long-standing Relationships with "Blue-Chip" Customers
Long-standing Relationships with “Blue-Chip” Customers 6
Slide 7: Our Theme/Focus Must Be On Change
Our Theme/Focus Must Be On Change • Change in leadership - approach • Change in strategic portfolio alignment • Change in goals/incentives • Change in the way we work 7
Slide 8: Portfolio Realignment
Portfolio Realignment Consolidated O-I 2003 Sales 2004 Pro Forma Sales(1) Plastics Plastics N.A. Glass Packaging N.A. Glass Packaging 12% 31% 31% 31% 38% 57% International International Glass Glass(1) (1) Includes $753 million for BSN for the period 1/1/04 – 6/21/04. The BSN business was acquired on
Slide 9: Core Priorities
Core Priorities • Achieve successful European integration • Divest blow-molded Plastics on favorable terms • Build modest growth momentum • Improve liquidity – reduce leverage • Improve system cost and capital capabilities • Implement global procurement initiatives 9
Slide 10: Superior Operating Results – Strategic Focus Areas
Superior Operating Results – Strategic Focus Areas Best practices & networks Leverage Global Glass infrastructure for other Capabilities platforms Sourcing & overheads Emerging economies Broaden Market Base Global offerings/distribution Focus on innovation Develop segment perspective EBIT cash focus
Slide 11: Global Glass Containers
Global Glass Containers 11
Slide 12: O-I Glass Profile
O-I Glass Profile Europe • 2004 O-I Sales – $4.6 Billion (O-I: 22% of Total) • 2004 BSN Sales – $1.5 Billion(1) (BSN: 25% of Total(1)) • Employees: ~ 27,300 North America (31% of Total) Asia Pacific (13% of Total) South America (9% of Total) • 82 glass manufacturing plants • 4 mold shops • 9 Majorit
Slide 13: Leading Producer of Glass Containers Worldwide
Leading Producer of Glass Containers Worldwide Leading producer in 19 of 22 markets Sole manufacturer in 8 of these markets North America South America Europe Asia Pacific U.S. Brazil Czech Republic Australia Canada* Colombia* Estonia* New Zealand* Ecuador* Finland* China Peru* France Indonesia Vene
Slide 14: Stable End-Use Markets
Stable End-Use Markets North America South America Distilled Spirits Distilled Spirits Tea & Juice Food 3% Tea & Juice 10% Wine 11% 19% Wine 16% 2% 4% Food 26% Beer(1) 42% Beer (1) Other 63% 4% Europe Asia Pacific Distilled Spirits 1% Wine Distilled Spirits Tea & Juice Tea & Juice 12% Food 5% 14% Wi
Slide 15: Plastics Packaging
Plastics Packaging Plastic Prescription Containers • Variety of design awards • Design knowledge for compliance with health and safety regulations Medical Devices • FDA-approved HDPE, LDPE or Polypropylene bottles • Custom design abilities Plastic Closures • Manufactured for a variety of application
Slide 16: O-I Plastics Profile
O-I Plastics Profile Continuing Operations 2004: O-I Locations ¾Employees: ~ 2,200 ¾Sales: $0.8 Billion Licensees and JV’s Boxmore N.I. Silver Spring, UK United Closures, UK O-I Hungary Plaskap (Turkey) Sewang (S. Korea) Petform Toyo Seikan (Japan) (Thailand) O-I de Mexico Zuhai Zhong Fu (China). O-
Slide 17: Superior Operating Results – Strategic Focus Areas
Superior Operating Results – Strategic Focus Areas Best practices & networks Leverage Global Glass infrastructure for other Capabilities platforms Sourcing & overheads Emerging economies Broaden Market Base Global offerings/distribution Focus on innovation Develop segment perspective EBIT cash focus
Slide 18: O-I Europe Integration – Significant Synergy Opportunities
Leverage Global Capabilities O-I Europe Integration – Significant Synergy Opportunities Improvement area Original assumption Current stretch Operational Excellence €32 million €100 million • Benchmark best practices across all European plants • Improve cost and quality at best plants • Optimize indu
Slide 19: European Integration 2004 Progress Report
European Integration 2004 Progress Report Operational Excellence • Improved throughput at several target factories • Identified work force reduction opportunities through benchmarking • Delayed or cancelled several capital spending projects Commercial Excellence • Reduced freight costs by locating p
Slide 20: O-I Europe Integration Social Programs on Schedule
O-I Europe Integration Social Programs on Schedule Establish European Headquarters in Switzerland Reduce capacity by 15% in Germany (vs. 2004) Implement work force reductions through benchmarking and best practices • Targeted work force reductions of approximately 950 over the next two years • ~ 60%
Slide 21: European Integration Summary
European Integration Summary • Ahead of schedule and on plan • Organization is being put in place • European headquarters established in Switzerland • Modifying commercial and operational business structures to reinforce centralized pan-European business concept • Social program on schedule • Initia
Slide 22: Broaden Market Base
Broaden Market Base • Emerging economies • Global offerings / distribution • Focus on innovation • Develop segment perspective 22
Slide 23: Focus on Fundamentals
Focus on Fundamentals * EBIT-cash focus * Mfg standardization * Pay for performance * Uniform IT systems * Supply chain management * Short/long commodity/capital approach * Site footprint visioning * CapEx post-audits * Talent management systems * CIO VP/HR appointments * Global sourcing leverage *
Slide 24: Asbestos Update
Asbestos Update PRESENTATION TITLE AND DATE PAGE # 24
Slide 25: Asbestos Update – Limited and Declining
Asbestos Update – Limited and Declining • Limited participant $300 • High-temperature insulation $245.9 used in few industrial $250 $221.1 applications $199.0 $190.1 $200 • Exited the business in 1958 $150 • Less than $40 million in sales $100 over 10 years • No liability after 1958 $50 2001 2002 20
Slide 26: Asbestos Update
Asbestos Update New Filings Declining Average Age of Claimant of New Mesothelioma Filings Total Cases Filed 25,700 27,000 78 24,000 76 21,000 74 18,000 14,900 72 15,000 70 12,000 68 9,000 66 6,000 64 3,000 - 62 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 67.2
Slide 27: Financial Overview
Financial Overview PRESENTATION TITLE AND DATE PAGE # 27
Slide 28: Working Capital as a % of Net Sales – Turnaround
Working Capital (1) as a % of Net Sales – Turnaround 30.0% 27.0% 25.3% 25.0% 24.7% 23.8% 24.2% 21.1% 22.5% 22.6% 22.2% 20.0% 20.5% 21.0% 15.0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 (1) For internal management purposes, working capital is defined as third party accounts receivable, p
Slide 29: Return on Invested Capital - Turnaround
Return on Invested Capital - Turnaround 16% 14% 12% 10% 8% 6% 2000 2001 2002 2003 2004 Note: ROIC is defined as pre-tax segment operating profit from continuing and Discontinued Operations divided by the sum of the averages of beginning and end-of-year amounts for share owners’ equity, minority shar
Slide 30: 13-Year Cumulative Cash Flow -- Turnaround
13-Year Cumulative Cash Flow -- Turnaround $ Millions $200 $- $(200) $(400) $(600) 92 93 94 95 96 97 98 99 00 01 02 03 04 19 19 19 19 19 19 19 19 20 20 20 20 20 Note: Excludes Acquisitions & Divestitures and Financing Activities. 30
Slide 31: Significant Free Cash Flow Generation
Significant Free Cash Flow Generation Year Ended December 31, 2004 $ Millions $234 million $808 improvement over year ended ($190) 12/31/03 $156 ($462) Cash Provided by Asbestos-related CapEx Free Cash Flow Operations before Payments From Asbestos-related Operations Payments Note: Free cash flow is
Slide 32: Net Debt
Net Debt $ Millions Net Debt Levels Being Reduced $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 2000 2001 2002 2003 2004 Note: Net debt is total debt less cash and short-term investments. 32
Slide 33: Full Year Results
Full Year Results Full Year 2004 Full Year 2003 $ Millions EPS $ Millions EPS Net earnings $ 235.5 $ 1.43 $ (990.8) $ (6.89) Earnings (loss) from continuing operations 171.5 1.00 (330.1) (2.39) Earnings from continuing operations exclusive of asbestos and unusual items 218.0 1.31 169.5 1.01 33
Slide 34: O-I Investment Highlights
O-I Investment Highlights • Worldwide leader in glass containers – attractive plastics presence • Technological leadership and global licensee network – glass and plastics • Long-standing relationship with “blue chip” customers • Low-cost producer of glass containers • Strategic portfolio realignmen
Slide 35: Slide 35